There are different risk characteristics among the many categories of investment styles. An index or asset class is designed to carry a particular risk exposure, a key identifying factor for any fund. Market capitalization styles include large cap, mid cap, small cap, and micro cap stocks. A growth style commonly pertains to stocks that have experienced rapid growth in earnings, sales or return on equity, as well as low book-to-market ratios (BtMs). A value style, on the other hand, refers to stocks that have carried low price to earnings ratios, high BtMs, and are often labeled as “distressed.” Beyond these broad descriptions, funds are sorted into categories such as domestic, international, emerging markets, select technology, health care, energy and others.

No industry wide standards exist for defining these terms, making it hard for proper benchmarks to define what constitutes value, growth, large cap, small cap, international, or emerging market stocks. To make matters even more difficult, carefully crafted fund prospectuses give active fund managers significant leeway to deviate from their fund’s stated investment style. As a result, companies with divergent risk and return characteristics are often lumped together into the same style.

The data provided in all charts referring to IFA Index Portfolios is hypothetical backtested performance and is not actual client performance. Only data for the IFA Index Portfolios is shown net of IFA's highest advisory fee and the underlying mutual fund expenses. All other data, including the IFA Indexes, does not reflect a deduction of advisory fees. None of the data reflects trading costs or taxes, which would have lowered performance by these costs. See more important disclosures at ifabt.com.